Chapter 3 BUSINESS ETHICS SOCIAL FORCES THE LAW

Chapter 3 BUSINESS ETHICS, SOCIAL FORCES & THE LAW

What is Business Ethics? üBusiness ethics is the application of values and standards to business conduct and decisions. üWhen a business upholds basic ethical standards, it will enjoy the competitive advantage of a good reputation and, over the long term, better earnings. üWhen a business violates ethical standards, social forces are set into motion, sometimes leading to changes in the law. 2

What is Business Ethics? üLaw as the Standard for Business Ethics. § Positive Law: if an act is legal it is ‘moral. ’ üUniversal Standards for Business Ethics. § Natural Law: higher standards for ethics. § A law can be legal but unethical. üSituational Business Ethics/Moral Relativism. üBusiness Stakeholder Standard of Behavior. 3

Why is Business Ethics Important? üImportance of Trust. üRelationship to Financial Performance. § Ford and Firestone. § Johns-Manville. üGood Reputation. 4

Cycle of Social Interaction Social Forces Social Environment Ethics Law 5

Public Policy, Law, & Ethics üProtection: § of the state, the person, public health, safety and morals. § of property and personal rights. § from exploitation, fraud, and oppression. § of creditors and rehabilitation of debtors. üEnforcement of individual intent. üFurtherance of trade. üStability and flexibility. 6

Categories of Ethical Behavior üIntegrity and Truthfulness. üPromise-Keeping. üLoyalty: Avoiding Conflicts of Interest. üFairness. üDoing No Harm. üMaintaining Confidentiality. 7

How to Analyze Ethical Dilemmas üDefine the problem. üIdentify who could be injured. üDefine the problem from opposing viewpoint. üWould you be willing to tell your family about your decision? üWould you be willing to tell the community? üReach a decision. 8

Resolving Ethical Dilemmas ü Blanchard and Peale Test. § Is it legal? § Is it balanced? § How does it make me feel? ü Front-Page-of-the-Newspaper Test. § Would I want my decision published? ü Laura Nash Test. § Requires examination from all perspectives. ü Wall Street Journal Model (3 C’s model). § § § Is my conduct compliant with the law? What contribution does this action make to others? What are the consequences? 9